The "quality experts" are pushing companies to makebasic changes in recruiting, training, performance appraisals, and merit-pay systems.But before HR executives can become change agents, they may have to take a hard look

at practices within their own departments.

Total Quality-OrientedHuman Resources

Management

DAVID E. BOWEN EDWARD E. IAWLER III

How iir^portant are human resources is-sues irk creating quality-oriented organi-

zations? H^re is Tom Peters' take on the peo-ple-side of quality improvement:

TQJVI often looks suspiciously likethe latest act in a long-running farcecalled Rjevenge of the Number Nerds.

Bui| the numbers nuts, despite (orbecaus^ of) the massive Baldrige appli-cation |(Malcolm Baldrige NationalQuality!Award—or "MBNQA," as onecorrespondent lovingly labeled it), donot get it. Real participative manage-ment, Baldrige categories notwith-standing, is about elusive characteris-tics such as dignity and worth, muchmore th^n computer-aided suggestiontrackingi systems. Real customer loyal-ty is as much or more about listening,listening and then listening harder stillthan it is about zero-variance manufac-turing processes.

One major focus in the quality movement

is on upgrading technical systems. This atjtention to process, product, and informatioirjtechnology (and the accumulation of nume:r jical evidence to document quality upgrade;^in these areas) is necessary—and often yieldsquality improvement. But it may not be thdkey variable in the quality equation. John E |Condon, immediate past chairman of thdboard, the American Society for Quality Cori-|trol, said it succinctly: "People really do makequality happen." i

Senior executives across the United States!apparently share this belief in the human re-jsources side of the quality equation. Considerlthe results of a Gallup survey of executiveperceptions on a range of competitive issues,conducted for the American Society for Qual-ity Control. The Gallup Organization inter-viewed some 615 senior executives, 307 rep Iresenting Fortune 1000 companies, tHeremainder from smaller firms. '•

The executives most frequently citedquality (service and product) and productivi-ty as the key competitive issues facing them, j

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David E. Bowen is associate professor ofmanagement, business programs, at ArizonaState University-West. Previously, he waswitii tine Sciiool of Business Administrationat the University of Southern Caiifornia.His research, consuiting, and executiveeducation interests include: (1) human re-source management practices in serviceorganizations, (2) managing customers, (3)service strategy, culture, and quality, and(4) international human resource manage-ment practices. His articles have appearedin Academy of Management Review,Journal of applied Psychology, SloanManagement Review, Human ResourceManagement Journal, and Journal of Busi-ness Research. He has co-authored fwobooks, Service Management Effectiveness(Jossey-Bass, 1990) and Advances inServices Marketing and Management (JAIPress, 1992). He serves on the editorialreview boards of the Academy of Manage-ment Review and Human ResourceManagement Journal. He received his Ph. D.from Michigan State University.

Asked to rate the relative effectiveness ofeight different methods for improving quali-ty, the participants gave top weight to employ-ee motivation (85 percent rated it highly effec-tive); Change in corporate culture came in a closesecond (82 percent); followed by employee ed-ucation (74 percent); process control (53 per-cent); expenditures on capital equipment (45 per-cent); more control of supplies (36 percent); moreinspections (29 percent); and improved adminis-trative support (28 percent). Clearly, executivesare convinced that human resources issuesare the most important.

The Baldrige Award (despite Peters'bashing) also highlights the importance of hu-man resources. "Human Resource Utiliza-tion" is one of the award's seven examinationcategories and is weighted with 150 points ofthe total 1,000. It states:

This category examines the effective-ness of the company's efforts to devel-op and realize the full potential of theworkforce, including management,and to maintain an environment con-ducive to full participation, qualityleadership, and personal and organi-zational growth.

This is consistent with the emphasis thatmost total quality management (TQM) advo-cates place on employee involvement as animportant part of any total quality effort. Theother categories are "Leadership" (100points); "Information and Analysis" (70points); "Strategic Quality Planning" (60points); "Qualit}' Assurance of Products andSer\'ices" (140 points); "Quality Results" (180points); and "Customer Satisfaction" (300points).

Quality guru W. Edwards Deming alsofocuses directly on human resources issues inhis widely cited "fourteen points" for qualityimprovement. While the exact wording ofthe fourteen points has changed over theyears, the following HR-related directives al-ways appear: (ii) institu te training on the job,(b) break down barriers between departmentsto build teamwork, (c) drive fear out of theworkplace, (d) eliminate quotas on the shopfloor, (e) create conditions that allow employ-

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ees to have pride in their workmanship, in-cluding abolishing annual reviews and meritratings, and (f) institute a program of educa-tion and self-improvement.

TOTAL QUALITY:OPPORTUNITY OR THREATFOR HR MANAGEMENT?

The importance of the HR side of the qualityequation provides HR departments with agolden opportunity. Quality can be the"business issue" that truly brings senior man-agers and IJR execs together to move fromjust HRM to strategic HRM. A major role inthe quality improveinient effort puts HR in aposition to contribute directly and visibly tothe bottom line, to add value to the compa-ny's products and services in the same waythat other functions, such as sales, account-ing, and production, add value. And liR cangain the heightened status that accompaniesa documented contribution to the organiza-tion's performance.

Many quality corisultants, however, arenot comfortjable about giving HR executivesand their staffs a strong hand in the qualityimprovement effort. As quality guru PhilipCrosby observes:

Most HR execs are still tied up in beinga regulatory agency. Many times theyact like robots. . . . There are two de-partments behind the times One isHR, the lother is purchasing. There areenlightened people trying to changethis, but most HR execs are their ownworst enemy. It's a case of "Physician,heal thyself."

This may explain why few companieshave turned to the HR department to leadtheir quality improvement efforts. Instead,the leadership role usually falls to a newlyformed unit. A number of reasons may ex-plain this. jFirst, many senior managers donot understand "holistic quality improve-ment" well pnough to appreciate the criticalrole of human resources issues in improvingquality. Second, most HR functions are so

Edward E. Lawler III is a professor ofmanagement and organization at theUniversity of Southern California. In 1979,he founded (and became director of) theuniversity's Center for Effective Organizations.He has consulted with more than 200organizations and four national govern-ments on such issues as employeeinvolvement, organizational change, andcompensation. As fhe author of more fhan200 articles and 20 books, he is widelyrecognized as a contributor to the fields oforganizational development and organiza-tional behavior. His most recent booksinclude High Involvement Management,Strategic Pay (Jossey-Bass, 1990),Employee Involvement and Total QualityManagement {Jossey-Bass, 1992), andThe Ultimate Advantage (Jossey-Bass,1992).

specialized and cut off from the rest of theorganization that department members lackthe breadth of perspective necessary for to-tal quality. Indeed, these specialists mayview the demands of a full-scale quality im-provement as a threat to their well-defined,well-guarded domains. Even though thenumber of top HR executives who report totheir CEOs or attend board meetings is in-creasing, this still is not the case in many or-ganizations. Blocked access denies HR peo-ple the opportunity to view the company'soverall competitive position. Third, HR de-partments are frequently autocratic and hi-erarchical, with strict definitions of re-sponsibility and authority. The participativeapproach, so necessary for an effective qual-ity improvement effort, can be a tough sell toan autocratic department.

A final reason for HR's minor role in qual-ity improvement stems from its own low self-esteem. There are people in HR, itself, whofeel threatened by the request to assume aleadership position on an important businessissue. They may view themselves as power-less, second-class citizens who really do notknow the business. Regrettably, they are of-ten right. As a result, senior managers mayconclude that the human resources issues in-volved in TQM are too important to be left tothe human resources department.

Should the TQM effort be run by the HRdepartment, or by a separate TQM office? It isa tough call, and we can only suggest whatnot to do. Do not have separate programs^anHR and TQM department acting indepen-dently. The more effecfive approaches createone integrated program that stresses employ-ee involvement and total quality manage-ment. In these programs, the HR organizafionneeds: (1) to be redesigned so that the HRfunction itself practices what is known aboutquality management, and (2) to insfitute hu-man resources management practices thatsupport TQM effectiveness throughout theorganization.

In what follows we describe how to ac-complish these two objectives, creating whatmight be called total quality-oriented humanresources management (TQHRM).

REDESIGNING THE HRMDEPARTMENT TO FIT TQM PRINCIPLES

How should the HRM function define its mis-sion and organize itself to truly become qual-ity oriented? Exhibit 1 presents a typical list-ing of TQM principles. Putting theseprinciples to work within the HRM depart-ment provides a first step toward that goal.

Quality Work the First Time. As is truethroughout the organizafion, the emphasis onquality in the HR department must come fromthe top. The senior HR execufive must trulycare that the department delivers only qualityservices, and this caring must shine through allactions and decisions— instilling a passion forquality among staff members. The HR execu-five must support his or her staff by givingthem the fime needed to "do it right the firsttime"—even when Hne maitagers are pressingfor a qtiidc fix. He or she must find ways of re-warding HR employees who trtily do qualitywork. And HR managers must insist that less-than-quality work be redone. Nothing leavesthe department unfil it is done right.

What is called "scrap and rework" on theshop floor has a counterpart in HR manage-ment. If a bonus system or orientation pro-gram needs to be redesigned because em-ployees could not understand it, this is clearly"rework."

The HR department might usefully trackthe time it takes to do each piece of rework,then compute the percentage of total produc-five time spent on rework tasks. As HR acfiv-ifies are repeated, staff members can analyzethe patterns and identify the causes of poorquality. This parallels the cause-and-effectanalysis techniques often applied on the shopfloor.

Focus on the Customer. Quality meansmore than doing things right the first time; itmeans first choosing to do the right thing. TheHRM department that succeeds in eliminat-ing rework may become more efficient, butthat does not guarantee it will be more effec-tive. It may be doing the wrong things... anddoing them very well.

[Doing the right thing (effecfiveness) is amatter of satisfying customer requirements.

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EXHIBIT 1PRINCIPLES OF TOTAL QUALITY MANAGEMENT

1. Quality Work the First Time

2. Focus on the Customer

3. Strategic, Holistic Approach to Improvement

4. Continuous Improvement as a Way of Life

5. Mutual Respect and Teamwork

This translates into making HR departmentsmore servicte-oriented, and less production-oriented. Ffroduction-oriented HR depart-ments are driven more by their own internaltechnologies and pet programs than by cus-tomer nee4s. Production-oriented depart-ments carfy on-the-shelf inventories ofcanned supervisory skills training programs,or they mass produce the same trait-based ap-praisal ratir^g forms for all departments, to citetwo examples.

A servi^ce-driven HR department func-tions like ja high-quality service firm— aworld-class jresort, a gourm^et restaxirariit, or aneUte consuj^ting firm. These firms thrive onsatisfying clients. They emphasize the intan-gibles, customize their offerings to differentclients, and involve their clients in decisionsthat affect ijhe services rendered. HRI4 mustlearn to thifive on satisfying its clients (e.g.,line managers). Services need to be offeredthat fulfill the unique and changing needs ofdifferent grpups of managers and employees.

This arb:ues for more co-design and co-production of services between the HR staffand clientsJ as when HR staff and line man-agers work! together to develop and teach atraining program. It also implies that the HRdepartment should be composed primarily ofgeneralists who act as client executives, ratherthan staffed with specialists who have a nar-row view of the business and champion theirvarious "product lines" (say, MBO or cafete-da-styie berjiefit plans). In sum, service-orient-ed HR deplartments get close to their cus-tomers and] encourage them to help set thedepartment agenda.

Finally, data-based decision making iscritical to quality. In this spirit, the HRM de-partment needs to collect data from line man-agers and others on how well it is doing. Sur-veys, focus groups, and other ways oilistening must keep HRM saturated witltclient information. In addition, externalbenchmarking data are critical to keeping tlieHR department aware of how its perfoi-^mance compares to that of world-class orga-inizations.

Strategic, Holistic Approach to Improve-^ment. Quality improvement may requirechanges in mission, structure, job design jmanagement practices, and every other faceljof the HR organization. Transamerica LifdCompanies, Los Angeles, recently overhauleciits HR function in a way that exemplifies astrategic, holistic approach to LnprovemeriiJThe process began by asking the employees(customers) served whether HR was doing a,good job. The majority revealed that they didnot know what services HR offered or how to access^them. Next, researchers surveyed the HR stcfi'flitself, asking them what interfered with theiiiservice to customers. Responses indicatedthat HR jobs were so narrowly defined tha'people could not see how their work fit intothe big picture.

As Transamerica reorganized to betteisserve internal customers, it created more chal-lenging work in HR. An advisory committedconsisting of HR managers and lijne represen--tatives helped guide the change. Guidancealso came from surveying other companiesknown for effective HR organization (an ap--plication of "benchmarking").

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The HR staff now has several cross-func-tional teams (e.g., people from employee rela-tions, employment, and compensation) re-sponsible for key processes and customers. Inaddition, the department operates a specialHR service team trained to provide one-stopcustomer service by answering 80 percent ofthe diverse array of questions that come intothe department. These teams are being cross-trained to become generalists.

For the first time, HR people are beingasked to join strategic planning meetings, andthey now maintain ongoing contact with cus-tomers. Overall, the HR function serves as amodel for innovative work design for the restof the company.

Continuous Improvement as a Way ofLife. A popular tenet in TQM is that continu-ous improvement must be ingrained as a valuein the corporate culture. In other words, itmust become part of "how we do thingsaround here," to use one popular definition ofculture.

Philip Crosby, despite his reservationsabout HR. executives, believes that "HRshould be the architect of corporate culture."It should be the charge of HR departments tobuild values and practices supporting contin-uous, incremental improvement in qualitythroughout the organization. And that em-phasis must be applied with equal force with-in the HR department itself. For example, asmall gain of, say, 4 percent in client satisfac-tion with this year's performance appraisalprocess needs to be highly valued—even if itcomes on top of an already high rating (e.g.,75 percent of the customers indicated theywere "highly satisfied" with last year's pro-cess). These small gains need to be valued asmuch as, say, the successful completion of ahigh-level executive search. Over time, thecumulative impact of endless small improve-ments transforms the department.

Mutual Respect and Teamwork. W. Ed-wards Deming talks about driving fear out ofthe workplace. Much of this fear is tied intothe control and hierarchy-dominated fabric ofmany organizations. The "workers" fear the"bosses," and this fear distracts from high-quality, collaborative work. If HR is to cham-

pion such issues as employee involvementand cooperation throughout the organiza-tion, it must first champion them internally.

In many organizations, HR is nowpreaching the importance of supervisors "em-powering" their employees by giving themmore responsibility, autonomy, and partici-pation in decision making. In one organiza-tion, however, a reluctant supervisor re-sponded with, "Why should I stick my neckout and be democratic with my people whenthe HR people manage their shops as if theywere each Attila the Hun?" When it comes tothe issue of empowerment, HR must practicewhat it preaches.

TOTAL QUALITY-ORIENTEDHRM PRACTICES

Once the HRM department has learned tomake quality a way of life within its ownfunction, it can assume an expanded role:supporting TQM throughout the organiza-tion. A long history of research—stretchingback much further than the current interest inTQM—has focused on the relationship be-tween product (and service) quality and anumber of HR practices and systems. There isno question, however, that the current fasci-nation vvith quality has brought this relation-ship into sharper focus. A number of areas inparticular—^including selection processes, de-velopment and training, and reward sys-tems—can have a significant impact on qual-ity performance. As we shall discuss next, thepractices recommended by advocates of totalqualit}' management fit much of what iskiiown about the relationship between HRMpractices and quality. Together, the historicalresearch and the recommendations on "bestquality practices" make a strong case forchanging the way matiy HR managementsystems are designed and operated.

Selection

For decades, research in the field has validat-ed various selection devices (ability tests, per-sonality tests, interviews, and the like) as in-

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dicators of a how a candidate will perform onthe job, in both productivity and quality. Thecurrent focus on total quality management,however, has brought a new dimension intoplay. Ability testing, in particular, needs to beviewed differently. Organizations that adopta total quality management approach requireindividuals who are keen problem solversand who can perform the t}rpe of mathemati-cal work demanded by statistical process con-

plicants video tapes of problem-solvinggroups in action and asks them how the)'would respond to a particular quality issue.

Concern for selecting capable employeesis not new, and current practices do not differgreatly from the traditional HR focus. What isperhaps different is the emphasis on a quality-oriented organization culture as the desired out-come of selection. This goal requires organi-zations to commit more resources to the

Deming and others in the TQM movement havebeen outspoken in their criticism of performanceappraisal practices These practices focus toomuch on the individual....

trol, Pareto ianalysis, and the like. These abili-ties need to; be tested for during the selectionprocess, to ensure that the candidate has thecapacity to learn and apply these methods.

Many Japanese companies that manufac-ture in the United States place great impor-tance on the whole selection process. For thesefirms, the process is a long one, with high stan-dards and a much greater emphasis on givingemployees a realisfic preview of what workwiU be like. The importance of this is verymuch corroborated by research findings,which show that realistic job previev/s helpproduce a sfable workforce that fits the organi-zafional culture. Interestingly, the pracfices inthese Japanese plants are very similar to thosenow used in plants that have adopted thehigh-involvement approach to management.

Because of the emphasis on group pro-cesses in total quality management (sugges-fion systems, work teams, etc.), selection tac-tics must identify candidates who canfuncfion well in group settings. This has led toa number of new selecfion activifies, includinginterviews by teams and the use of assessmentcenters. One company. Motorola, shows ap-

selection process itself, and to structure thejprocess differently so that it includes a realis- itic preview of expected behaviors and en-lcourages self-selection.

Development and Training

This is a major feature of all total quality main-iagement programs. Typically, the training]covers problem-solving technologies, prob-|lem analysis, statistical process control, ancijquality measurement—a reach that goes farjbeyond specific job skills. Predictably, organi-|zafions that use problem-solving groups andjteams also conduct extensive training irijgroup process and group decision making. Fi-nally, quality programs often call for exten-1sive training programs for managers, to sensi-tize them to the importance of quality, thecost of poor quality, and the power of theirbehavior to influence the quality of productsand services.

In many respects, a strong emphasis ontraining is exactly what human resource pro-fessionals have been urging for decades. Inmany cases, however, they have been unsuc-l

35i

cessful in getting organizations to commitheavily to such an endeavor. Internationalanalyses of training costs show that U.S. cor-porations spend less on training than do theirJapanese and European counterparts. Thereare some indicafions that this is, in fact, chang-ing—-and the change is long overdue. Motoro-la and IBM stand out as two companies thathave made particularly strong commitments totraining. Both encourage extensive training forall employees, mandafing a specified numberof days annually for aU employees.

A strong emphasis on training is also con-sistent with the high-involvement manage-ment approaches that have been advocatedfor decades. Again, research has clearlyshown that if employees at lower levels are tomake decisions, they need not only job skillsbut also team-work skills and decision-mak-ing skills, as well as skill in managing theirtime and the company's resources.

In many respects, total quality efforts rec-ognize the significant value that HR can addby increasing the skill level of the employeesin the organization. This value is enhanced ifthe HR department approaches trainingneeds with a customer service focus, thus be-coming a partner in the total quality manage-ment effort.

Career Development

Historically, the career development prac-tices of most large organizations have sup-ported linear careers—i.e., career paths thatmove up the hierarchy through a singlefunction. Assessment centers, managementdevelopment programs, and a wide range ofrelatively sophisticated practices have madethis path the desired route, ostensibly to in-sure that the senior managers in an organi-zation are talented, knowledgeable individ-uals. These hierarchical practices need to bechanged significantly.

In order to understand the work flow ofan organization, employees need a systems ori-entation, a view of the whole that includes thehorizontal relationships between processes.Understanding the horizontal flow requirescross-functional experience; improving the

flow often means putting more power and de-dsion-making authority in the hands of indi-viduals at lower levels of the organizafion.

The career implications of this approachare significant. As a starfing point, the systemsorientation argues for greater emphasis oncross-functional career moves and, in somecases, purely horizontal reassignments. Thistype of career move has characterizedJapanese organizations for decades, but rep-resents a significant departure for Americanorganizations. Interestingly, the same recom-mendations that apply here fit with both anemphasis on total quality management andan emphasis on high-involvement manage-ment. Both focus attention on horizontalflows and work designs. Understanding andmanaging these, in turn, require individualsto gain a picture of the whole as well as ex-perfise in particular functions.

Performance Management

Individual performance appraisal is basic tothe human resource management systems ofmost large corporations. Performance ap-praisals are used to determine reward levels,to validate tests, to aid career development, toimprove communications, and to facilitateunderstanding of job dufies. Deming and oth-ers in the TQM movement, however, havebeen outspoken in their criticism of the per-formance appraisal practices typical of mostcorporations. Deming and his colleaguespoint out that these practices focus too muchon the individual—and often try to assignblame for qualit}' problems to individuals.Deming argues that most quality problemsare the product of systems and processes.Thus, focus on individuals is counterproduc-tive,, in that it diverts attention from the root(i.e., systemic) causes of poor quaUty.

Deming calls for totally scrapping indi-vidual performance appraisal systems, par-ficularly those that are based on managementby objectives or that encourage competitionwithin the organization. In many respects,his recommendations tend to be consistentwith the Japanese orientation toward collec-tive responsibility.

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Performance appraisal, then, representsthe most sigtuficant area of conflict betweencurrent and recommended practices. For ex-ample, companies frequently try to solvequality problems by putting more emphasison quality-related measures in the individualperformance appraiscil process. Although thisis easily accommodated within an organiza-tion's existing performance management sys-tem, it is sfill individual appraisal, and thus atodds with TQM philos

tive results. These methods are rapidly be-coming common in companies using high-involvement management and team-basedapproaches.

Overall, there seems to be little quesfionthat performance management practicesneed to change significantly if quality is to bepart of the organizafion's culture. Clearly, tra-ditional performance appraisal systems aremore supportive of individual excellence and,perhaps high levels of individual perfor-

Moreover, Job-based pay systems tend to rewardindividuals for moving up the organizationalhierarchy.. .directly counter to the emphasis onhorizontal movement....

Complete abandonment of individualperformance management represents amuch more significant paradigm shift, onethat, in faci{, few organizations are willing tomake. But ijf the goal is simply to align a sys-tem more: closely with the principle ofshared responsibility for quality, a total shiftmay not bei necessar],^. For example, the per-formance inanagement system can focusstrongly on developing skills and abilitiesnecessary tjo perform well and, as such, di-rectly suppbrt collective responsibility. In ad-dition, performance ratings do not have tobe competjitive; individuals can competeagainst atisolute standards rather thanagainst each other.

Finally;! in participative and team-basedorganjzatic^ns, peers can become involved inthe appraiskl process, and individuals can beevaluated (in how much they contribute toteam JDerformance and how much they co-operate. Tl is, in turn, can help reinforce theemphasis o|n collective responsibility and onthe horizorital relationships that are neededto get indiv|lduals to own systems and coUec-

mance than they are of a systems-oriented foicus on quality. Regardless of an organizaition's decision—^to abandon individual}performance appraisal, or to modify the sysitem to gain a better fit with the emphasis onquality— the organization wiU need to makdsignificant changes. The human resourcemanagement department should lead thi$change process.

Pay Systems

Most pay systems have likewise focused or(individuals. Job descripfions speU out what anindividual is to do, job evaluation systemssuggest how much the job is worth (and thushow much the individual is to be paid), ancijmerit pay increases reflect how well the indi-jvidual has done the job. Again, there is j^strong, direct conflict between these tradintional practices and the TQM emphasis oricollective responsibility, horizontal relafion-ships, and horizontal learning.

The first conflict is in the area of job deAscripfions and pay based on job worth. These!

approaches suggest that an individual's ac-countabilities and responsibilities are limit-ed to the tasks that he or she regularly per-forms. Job descriptions, for example, defineprecisely what an individual is—and isnot^accountable for. In contrast, much ofthe emphasis in the total quality manage-ment literature is on flexibility, and on re-sponsibility for an entire production orservice process.

Moreover, job-based pay systems tend toreward individuals for moving up the organi-zafional hierarchy. This is directly counter toan emphasis on horizontal movement, and ondeveloping skills related to both upstreamand downstream processes.

Interestingly, the body of writing on to-tal quality management contains little discus-sion of new approaches to pay that are morecongruent with TQM. (For an exception tothis rule, see Richard Schonberger's "TotalQuality Management Cuts a Broad Swath,"also in this issue.) Advocates of the high-in-volvement management approach, however,have suggested substituting skill-based payfor job-based pay. In essence, these systemspay individuals for what they can do by bas-ing increases on the acquisition of new skillsand knowledge. The skills may relate to ei-ther horizontal or vertical processes. The log-ic is that individuals with this broader knowl-edge will be more effective problem solvers,and thus make a greater contribution to qual-ity. Overall, skill-based pay would seem thebetter fit.

Individual merit pay systems place astrong emphasis on individual performance,almost always creating a competitive situa-tion among employees. (To give a higher in-crease to one employee, managers must takemoney from another employee in the form ofa lower increase.) Not surprisingly, qualitymanagement programs have emphasizedabandoning individual-based merit increasesystems. Typically, however, they have notsuggested an alternative.

'n-iis dearth of ideas in the area of pay sys-tems contrasts sharply with the emphasis ongainsharing plans, profit-sharing plans, andstock ownership plans that is present in much

of the writing on employee involvement andparticipative management. This body of liter-ature emphasizes pushing rewards for collec-tive performance throughout the organiza-tion and creating a financial reason foremployees to be involved in the business andmake performance improvements.

In the United States, where rewards forperformance are a major cultural value, it isimportant to create reward systems that notonly reward quality improvements but alsocreate a team environment and a group orien-tation. Creating organizations that focus oncollecfive pay-for-performance is a major chal-lenge for human resource management de-partment. The evidence on gainsharing plans,profit-sharing plans, and other collecfive pay-for-performance plans strongly suggests thatthese tactics work only when they are com-bined with strong communication programsand relatively high levels of employee in-volvement.

The implication of this for the human re-sources function is clear. Not only is it im-portant to support the design of group,plant, and organizational-wide pay-for-per-formance plans, it is also critical to developappropriate training arid communication ac-tivities. In the absence of ongoing trainingand communication, these prograrrts maysimply end up as extra costs that producefew advantages.

Perquisites

Most large organizations tend to be highlystratified. Some stratification is required bylaw, but much of it occurs—quite simply—^be-cause organizations operate hierarchically.And the allocafion of perquisites and benefitsreinforces the hierarchy. Organizations cando little about the fact that some employeeshave to be on a nonexempt, overtkne-pay ba-sis while others are exempt. However, theycan do a lot about who has access to parkinglots, dining rooms, and office space. The prin-ciple of collecfive responsibility strongly sug-gef ts that organizations need to be muchmore egalitarian in their personnel and hu-man resource management practices. This

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point also is highly consistent with the em-phasis found in employee involvement pro-grams on non-hierarchial allocation ofperquisites^ status symbols, and a host of oth-er organizational rewards.

Perquisites are the trappings that go with aposifion, and in that sense they are simply sym-bolic and cultural. But, in some respects, the is-sue goes beyond this. Allocating rewardls basedon hierarchy can influence how strongly indi-viduals are; motivated to seek advancement.Upward mobility is highly attracfive in em orga-nizafion where "the group at the top" is expect-ed to direct Ithe organizafion, assume account-ability for results, and enjoy the perquisites.Again, we see a sharp conflict with the principleof a broad based, mulfilevel responsibility forquality. Arriong other things, the hierarchy en-courages infjlividuals to listen to people becausethey are in a {position of power, rather than becausethey have greater expertise. It also sends a messageto individuals at lower levels in the organiza-fion: "Sit back and wait for people at the top totake acfion and solve the problem."

One final point about status symbols andperquisites. They tend to create an environ-ment in wtiich communication channels areeasily clogged, especially when communica-fions need to move across funcfional and hi-erarchial leyels. Differences in office space, ac-cessibility, and visible rewards can block thekind of communication flow and work rela-tionships tl^at are needed to produce systemsthinking and solufions.

Labor Relations

Historically, labor relations in the UnitedStates have been adversarial, parfially becauseU.S. labor laws were designed to support col-lective bargaining. There is little doubt thatadversarial; relafionships are the anfithesis ofthe shared responsibility needed to producehigh-quali<j5^ products and services. This isparticularly true if the union/managementagreements are based on large bureeiucraticcontracts, carefully specified jobs and ac-countabilififes, and elaborate grievance proce-dures. There is little room for generating thekind of participation, problem solving, and

systems solufions that quality managementprograms emphasize.

Advocates of employee involvement ar-gue for labor/management relafionships thatmake unions "partners" in the organizafion'ssuccess and regard them as "crifical players" iirihelping the organizafion achieve its goals—re-lafionships much more compatible with totalquality management efforts. The union alsoassumes responsibility for quality, thus creat-ing opportunity for more systems thinkingand more creafive problem solving. These re-lafionships also help create a dimate in whichemployees parficipate in many of the impor-tant decisions affecting quality. In the absenceof union support for employee problem solv4ing and union/employee parficipafion in im-'provement groups, there is a danger that em-ployees will not trust the process, and that tlieunion will ultimately reject the acfivifies tliai;are part of the total quality program.

Human resources departments clearlyhave a central role to play in moving union re*lationships into a partner mode. More thanany other part of the organizafion, the humanresources funcfion deals on a day-to-day basiswith the union. It also, of course, handles col-lecfive bargaining and indeed, historicall]?],has gained considerable power in organiza-tions because it does so. It needs to play a mei*jor role in restructuring the collective bar+gaining process, turning an adversarialprocess into one that is more problem-solvingand vision oriented. Unfortunately, HR de+partments somefimes resist this change be*cause they see it as eroding their power andinfluence. In fact, it may have quite the oppbrsite effect if a more effective labor managie+ment relafionship is created.

A posifive example of this change is repHresented by the Saturn Corporafion's cooperfafive labor/management relationship. There]the contract has been shortened to just a ie\ipages of general philosophy about how theunion and management relate. It clearly statedthat the company and its union are partneirsin this venture and that the role of union \ione of facilitafing employee's involvement iirithe running of the business and in producinga high-quality product.

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Communication

Feedback about quality and informafionabout the strategy and direcfion of the orga-nizafion are critical to all quality-improve-ment programs. The human resources man-agement systems in an organizafion need tobe structured so that they encourage the openflow of information related to quality andbusiness results throughout the organizafion.The human resources department, of course,is just one component in the organizafion thatneeds to support this approach. Nevertheless,because of its presence throughout the orga-nizafion and its crifical role in many of the ba-sic systems that regularly impact on employ-ees, it needs to play a major role in supportingwidespread communication of performanceresults, objectives, and strategic plans. Thisorientafion is a notable contrast to the histor-ical practices in many large organizafions.

Secrecy about performance results, busi-ness plans, and major changes is the normfor a variety of reasons. In union/manage-ment situafions, management has assumedthat the union cannot be trusted to receiveconfidential data—or that the informationwould come back to haunt the company in acollective bargaining session. Many of thesame atfitudes pertain to informafion givento employees: They're not interested in it,wouldn't understand it, or can't be trustedwith it. The result has been that employeestend not to care about their company's per-formance.

The evidence from a variety of studiesstrongly suggests that if employees are goingto care about goals and performance im-provement plans, they need to receive regu-lar, ongoing communicafion. In addition, be-ing part of the process that structurescommunication programs also helps. Thehuman resources function needs to play arole in assuring that employees receive in-formation, have the skills to understand thatinformation, and, where appropriate, partic-ipate in developing the communication pro-grams that exist in the organizafion.

Finally, the human resources functionneeds to help the organization develop in-

formafion about how it is doing in establish-ing a quality culture, improving communica-tion, and involving individuals in the busi-ness. Atfitude surveys can facilitate this, ascan focus groups. The results of these needto be generally distributed and, where ap-propriate, used as the basis for problem-solv-ing acfivifies.

CHANGE AND HR MANAGEMENT

Five themes emerge across the different qual-ity-oriented HR pracfices, setfing them apartfrom convenfional HR pracfice: (1) a focus onthe organization, rather than the job; (2) sup-port for group performance, rather than indi-vidual performance; (3) egaKtarianism, ratherthan hierarchy; (4)change, rather than stabili-ty; and (5) participafion, rather than com-mand and control.

These five themes represent a radicalbreak with the past as far as HR manage-ment is concerned. They demand majorchanges in both the way HR departmentsare run and in the type of systems they cre-ate and operate.

Major change can be frightening, but itcan also be empowering. We believe the op-portunity exists for HR departments to be-come much more important in most organi-zations if they can change the way theyoperate. The pursuit of total quality can in-spire, guide, and unify this change.

If you wish to make photocopies or ob-tain reprints of this or other

articles in ORGANIZATIONAL DYNAMICS,please refer to the special reprintservice instructions on page 80.

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SELECTED BIBLIOGRAPHY

Tom Peters'; thoughts on TQM were excerptedfrom a 1991 Tom Peters Group newsletter. Y. K.Shetty and P. F. BuUer, "Regaining Competi-fiveness Requires HR Solufions," Personnel (July1990, pp. 8-12) was the source for the surveydata we repprted. Donna Brown, "HR: EitirvivalTool for the; 1990s," Management Review (March1991, pp. lp-14) was the source of Crosby'sthoughts on HR execufives. Other wrifings thatstress the paramount iimportance of human re-sources in quality include: Randall S. Schulerand Drew L. Harris, "Deming Quality Innprove-ment: Implications for Human Resource Man-agement in a Small Company," Human ResourcePlanning (1^91, Vol. 14 No. 3, pp. 191-207);WiUiam F. Roth, Jr., "Quality Through People: AHit for HR," Personnel (November 1989, pp. 50-52); Willian) N. Yeamans, "Building Competi-fiveness Through HRD Renewal," Training &Development Journal (October 1989, pp. 77-82);Charles F. Hendrick.s and Arlene Triplett,"TQM: Strategy for 90s Management," PersonnelAdministration (December 1989, pp. 42-48);William F. Roth, Jr., "Dos and Don'ts of Quality

Improvement," Quality Progress (August 1990^pp. 85-87); and "A Forum for the Power of Qual-ity," Quality Progress (February 1990, pp. 19-24).

Arfides that describe or imply how to im-plement TQM principles within the HRM de-partment, itself, include: Clay Carr, "InjectingQuality into Personnel Management," PersonnelJournal (September 1987, pp. 43-51); "Transamer^ica Rethinks HR Structure," HR Reporter; DavidBowen and Larry Greiner, "Moving from Prcwduction to Service in Human Resources Man-agement," Organizational Dynamics (Summer1986, pp. 35-53); and WiUiam Kahnweiler, "HRDand Empowerment," Training & Develofpment(November 1991, pp. 73-76).

References that describe the HRM pracficesassociated with employee involvement andtheir relationship to total quality include: Fd-ward Lawler III, The Ultimate Advantage (SanFrancisco: Jossey-Bass, 1991) and EdwardLawler III, Susan Mohrman, and Gerald Led-ford. Employee Involvement and Total Quality Man-agement: Practices and Results in Fortune 1006Companies (San Francisco: Jossey-Bass, 1992).